Capital containment of the Chinese Academy of Sciences, has the spring of scientist entrepreneurship arrived?

Introduction:

In the past two years, many VCs have been optimistic about the projects of scientists and feel that it is time to vigorously support them and encourage them to start businesses, because some scientists have mastered core technologies and can win the future by winning good projects.

Just a few years ago, many VCs were afraid of scientist projects, thinking that they were either too cutting-edge or had no market prospects.

"Investors never invest in scientists for entrepreneurship, but instead compete to be friends with scientists and learn about the discourse system of scientists." "Scientists have gone from a single relationship with technology, laboratories, and students to the former opposition - the language of users, markets, and capital." "Previously, the intersection was not deep, and the two belonged to different siege systems, and they have begun to step out of their own 'city', making two-way efforts."

These 180 degree, dramatic reversals have only occurred in the past 5 years. Investing scientists is still a high-risk thing, but they have a stronger learning ability than ordinary entrepreneurs, and if problems arise, they will quickly turn around.

Author | Li Tongwei

Wang Yin refused, and as soon as he heard the word "bet", he immediately refused. During the 5-month financing period, I met hundreds of institutions. The company founded by Wang Yin (pseudonym) was born out of the Chinese Academy of Sciences and started financing a few months ago.

In the past half year, many institutions have eagerly expressed their desire to acquire shares to Wang Yin, but in the end, only six were able to achieve it. The cooperation reached voluntarily by Wang Yin is approximately zero. As for gambling, he said calmly, "The essence of marketization is supply and demand, and there are not many technologies that are scarce and can be industrialized."

"But there's a lot of money."

A company specializing in big data and artificial intelligence. Its founder Wang Lei, who was previously the chief engineer of the Internet Big Data Research Center at the Institute of Automation, Chinese Academy of Sciences, said, "The subscription amount in this round exceeded expectations by 2-3 times."

Enterprises that are not in the financing period are also surrounded by VC. The founder of Zhongke Aurora, a laser display company, is named Bi Yong. He also serves as a researcher at the Institute of Physical and Chemical Technology of the Chinese Academy of Sciences. He told me that even if there are no financing plans at the moment, he has met more than 50 investment institutions this year and has received over 100 business cards.

There are old friends, new institutions, and those who spread messages through relationships. Many government guidance funds also hope that Zhongke Aurora can be established locally.

On winter weekends, the Institute of Physical and Chemical Technology of the Chinese Academy of Sciences located on the north fourth ring road in Beijing

"It is evident that the investment heat for hard technology in the first and second half of 2021 is changing," said Tian Yu, Deputy General Manager of China Energy Storage Corporation. Zhongchu Guoneng is an industrialized company of compressed air energy storage technology, born from the Institute of Engineering Thermophysics, Chinese Academy of Sciences. It just completed a new round of financing in October 2021.

In the C round of financing just completed in December, Xinchangzheng was also favored by many funds, and the total amount of funds raised in the end was also much higher than the original plan. The founder of Core Long March is Zhu Yangjun, who once served as the Deputy Director of the First Office of the Institute of Microelectronics, Chinese Academy of Sciences. He has more than 20 years of experience in the research and development of semiconductor power devices, and has undertaken a number of major national science and technology projects.

When sorting out the financing list of Xinchangzheng, I pulled out a long list:

Dinghui VGC (Innovation and Growth Fund) leads the investment, with Beijing Automotive Industry Investment, Gaorong Capital, Xinke Energy Investment, Guoke Jiahe, FAW Lihe, Huadeng International, Guiyang Venture Capital, Huaxu Fund, Xinchao Group, Jiangning Economic Development Fund, Huajin Capital, Yunhui Capital, Nanxi Capital, Junshi Capital and others following suit.

You're right, the above case is just the tip of the iceberg. During the interview, people kept telling me that some institutions often visit various offices of the Chinese Academy of Sciences to explore and exchange ideas in order to discover high-quality topics and projects; If the strategy is more aggressive, it will take a lot of time to persuade scientists to start a business, help them raise funds, find people, and save up trouble.

Institutional investors have surrounded the city of the Chinese Academy of Sciences.

Hua Ge (pseudonym) drew a picture on the whiteboard to analyze the distance between people with different educational levels, entrepreneurs, and VCs. What I heard from this founder of the Chinese Science Department was a story similar to a siege:

PhDs, researchers, scientists, and academicians have their own unique discourse system in their own "city"; Driven by capital, many times - although not all times - venture capitalists representing advanced productivity have come to the city and warmly welcome them out.

But this is still not a simple matter. Hua Ge told me that objectively speaking, scientists are the group of people farthest from entrepreneurs in various senses. "Scientists can't be entrepreneurs at all, most of them just keep businesses alive."

Nowadays, investors never invest in scientists for entrepreneurship, but instead compete to be friends with scientists and learn from their discourse system; Scientists have gone from a single relationship with technology, laboratories, and students to their former counterparts - the language of users, markets, and capital. The two, who used to have a shallow intersection and belonged to different siege systems, have begun to step out of their own "city" and make efforts in both directions.

A CEO from a department of the Chinese Academy of Sciences also told me about this: in the early stages of entrepreneurship, he invited a computer PhD from Peking University to join the company and was responsible for marketing work in the early stages. He saw the other party show reluctance. The CEO with a postdoctoral degree asked the other party in response, "Why don't you do it?"?

I have to do it all.

01VC Siege

Many people - or perhaps everyone - have a fixed belief that "conducting scientific research" is contradictory to making big money.

Scientific research, especially in basic disciplines, means a more mundane life and more difficult challenges. Scientific research work is rigorous and difficult, and the number of experiments and demonstrations is only for a small progress, which requires long-term investment and research by researchers. Correspondingly, it also represents that some of the factors they naturally need for entrepreneurship are not the same, such as efficiency, certainty, industrialization, replicability, etc.

Bastille, an American company specializing in technology transfer, once conducted a survey: the failure rate of American university professors in entrepreneurship reached an astonishing 96% to 97%. Therefore, when choosing partners, Bastille did not prioritize the entrepreneurial projects of university professors.

Da Tai Capital also had an unwritten military rule internally - not investing in teaching entrepreneurship.

"There is a natural gap between scientists and entrepreneurs, and this gap largely stems from the past experience of scientists," said Zhang Ting, a partner of Datai Capital, candidly

In his eyes, scientists simply pursue technology, far from the industry and far from the customers. Another thing is that they are usually relatively aloof and find it difficult to lower their face to catch the ground. But this gap cannot require the market to adapt to scientists, only scientists themselves can make changes.

Zhang Ting, investor, why do you understand the mentality of that group of people so well? Because he has worked as a scientist at the Chinese Academy of Sciences, holds a doctoral degree, and has since started his own business.

Hou Liming, CEO of People's Science and Technology Corporation of China, has previously been an investor and has been cautious in investing in projects initiated by scientists.

Nowadays, the iron rule of Datai Capital has long been broken, as they have invested in multiple companies founded by scientists, and Hou Liming has also joined a company founded by scientists as its CEO.

We have entered an era where technology enhances productivity, and our understanding of scientist entrepreneurship has begun to differ from before. At the same time, most investment institutions are actively shifting their focus.

Dreamink was born in the Institute of Physics and Chemistry of the Chinese Academy of Sciences. It is engaged in the manufacturing of liquid metal flexible electronic additive. In October 2021, it will complete the financing of nearly 100 million yuan, with Zhongxin Juyuan leading the investment and Sunshine financing capital following the investment. Only three months later, we are now completing a new round of financing delivery worth tens of millions of yuan.

The chief scientist behind it is Researcher Liu Jing, and CEO Chen Bowei is Liu Jing's student. One focuses on basic research, while the other focuses on achievement transformation. Chen Bowei told me that as a pioneer of disruptive hard technology, there were not many investment institutions that initially paid attention to or understood him, but since the second half of 2020, there has been a significant increase in institutions actively contacting him.

In the view of Tian Yu, Vice President of China Energy Reserves Corporation, the true rise of this trend was in early 2021, and the shift in direction was already evident in the second half of 2020.

People's Science and Technology is an artificial intelligence technology engine and scientific and technological achievements transformation platform jointly launched by People's Daily Online and the Institute of Automation of the Chinese Academy of Sciences. What it does is cross modal intelligent search. The technical team recently won the the State Natural Science Award. Chairman Li Bing, a researcher, said, "Indeed, many people are looking for it one after another. We actually prefer social capital with market-oriented genes to come in, but less consideration is given to foreign and state-owned backgrounds."

Wang Lei, founder of Zhongke Wenge, stated that in the C-round financing in August 2020, institutional subscriptions were very active, and they had to politely decline some investors. "The subscription amount has exceeded the expected financing amount by 2-3 times," said the new round of financing worth billions of yuan that is currently being completed

笔记

The Institute of Automation, Chinese Academy of Sciences, is also a popular destination for venture capitalists in 2021

The research achievement transformation projects of the departments of the Chinese Academy of Sciences and university research institutes have just begun to be popular in the market. Zhang Ting believes that this is a good thing, but higher requirements are put forward for investment institutions. "We investors need to be more professional and understand the industry better. Datai focuses on investing in hard technology, so the investment team is mostly male engineering graduates from the Chinese Academy of Sciences, Tsinghua University, and Jiaotong University."

Yingnuo Angel has seen over a hundred research achievement transformation projects this year, with over 50 belonging to the Chinese Academy of Sciences system. So far, we have invested in 13 projects of the Chinese Academy of Sciences, including biotechnology R&D company Jun Quanzhi Pharmaceutical, artificial intelligence technology engine R&D company People's Science and Technology, security automation defense platform Zhongke Weilan, geospatial analysis company Mientropy, and component big data intelligent service provider Guoke Saisi.

Investing in Jun Quanzhi Medicine has an unknown story. Ding Yiting, an angel investor at Inno, first met the scientist founder in August 2019, and nearly a year later, she convinced her team to start a business.

Behind this is a project originated from the National Nanoscience Center of the Chinese Academy of Sciences, which has developed the world's first nano robot that can work stably in living animals. It can complete the specific blocking of tumor blood vessels, and show good therapeutic effects in various tumor models such as liver cancer and breast cancer.

The founder, who is still a researcher at the Chinese Academy of Sciences, hesitates about entrepreneurship. "He feels like he has never done it before, and he hopes to think about all aspects before doing it." This year, Ding Yiting has had multiple conversations with him, using successful case studies of scientist entrepreneurship to persuade him and analyze how they can achieve it. In August 2020, Junquan Zhiyao was established.

Under the tide, Da Tai Capital and Yino Angel are just one of the epitomes, and a large number of VC's are already on their way.

Zhongke Chuangxing originated from the technology achievement transformation team of the Institute of Optics and Astrology of the Chinese Academy of Sciences. It was established in 2013 and has invested in more than 100 Chinese Academy of Sciences enterprises. It is the investment institution with the largest number of Chinese Academy of Sciences enterprises, involving research institutions such as the Xi'an Institute of Optics and Astrology, Changchun Institute of Optics and Astrology, Shanghai Institute of Microsystems, Institute of Physics, and Institute of Acoustics; Guoke Jiahe is a first-class investment platform directly managed by Chinese Academy of Sciences Holding Co., Ltd. It has also been supporting the scientific research transformation projects of Chinese Academy of Sciences for 10 years.

In addition, behind many projects of the Chinese Academy of Sciences, frontline institutions frequently appear.

02 Spring is here

In Silicon Valley, scientists have a relatively mature "routine" for entrepreneurship: first, scientists use core technologies to establish companies; Then find investment institutions and lawyers to complete patent applications; Then find a team of engineers who not only master engineering technology, but more importantly, help the founder transform technology into products.

But looking back at China, Zhang Ting used his personal experience to explain the "difficulty" of scientists transitioning from focusing on science to paying attention to user needs. He said, "When I analyze myself, as a teacher, I start from research. Firstly, I focus on national projects, and secondly, I publish more papers. The key is innovation, without considering application."

Huang Mingming, founding partner of Mingshi Capital, once said, "The glory of a big cow is of no use," and many scientists "do not even have engineering capabilities, let alone industrial capabilities."; Lenovo Venture Capital President He Zhiqiang mentioned that when investing in Cambrian, the biggest concern is whether the team incubated from the Chinese Academy of Sciences has the ability to operate the enterprise and whether they have a business acumen.

The startup company has undergone a great transformation for Zhang Ting. "I paid tuition at the startup company, and when I looked back, I realized that the most essential thing was to satisfy customers with products. At that time, I was largely working behind closed doors. After creating a" good product that I thought was better ", I felt that no one had better performance than me, so I just gave it to customers without hesitation."

"However, the client said that this was not what I wanted. You made 9 out of the 10 requirements that I was concerned about, and there was still 1 that was not covered. We had to take it back and continue to make changes. After making the changes, we went to the second client. The client said that he still had the 11th and 12th requirements. In the process of constantly working back and paying tuition fees, it was not only a waste of time but also a fleeting opportunity."

As a result, Zhang Ting, who later became an investor, paid the most attention to whether scientists and entrepreneurs truly understood their clients, where they were, what they needed, and even detailed each specific aspect. The experience and inertia of scientists themselves can cause them to undergo painful transformations.

Nowadays, more down-to-earth technology entrepreneurs have truly made technology entrepreneurship a reality. "Scientists who are closer to the industry are worth our 'hunting around'," Zhang Ting said.

Zhang Ting's consideration for investing in the Long March of Xinxin comes from the following three aspects. Firstly, founder Zhu Yangjun is not a first-time entrepreneur and has previously worked in research, operation, and marketing, as well as entrepreneurship. Secondly, the team composition is not entirely from the Chinese Academy of Sciences, as there are many people with experience in the market. Thirdly, Zhang Ting's junior brother used to work at the Chinese Academy of Sciences Venture Capital. After investing in the chip Long March, he went to the invested company himself and also served as the CFO. Zhang Ting became interested.

In the view of Wang Lei, the founder of Zhongke Wenge, many projects of the Chinese Academy of Sciences have increased their technology from 0 to 0.6, providing technical verification and product prototypes. However, start-up enterprises need to face the market and must move from 0.6 to 1.0 to achieve the landing of mature products; Moving from 1.0 to 100, achieving large-scale operation.

In the early stages of the company's establishment, in order to show his emphasis on the market, Wang Lei asked a computer PhD to run the market. The partner was not very happy and said that I wanted to do academic and technical work while pursuing a PhD. Why did I go to run the market? Wang Lei said, "I'm going now, aren't you going?"

Wang Lei's original intention was to arrange more outstanding partners to go to the market at the beginning to demonstrate the company's determination to truly value the market, and to promote core technical personnel to embrace the market and complete the transformation.

Zhongke Wenge was founded in 2017, and Wang Lei flew over 170 times from 2017 to 2018 to meet clients. He admitted that entrepreneurs are born to deal with a variety of people, and this ability is precisely what they lack in the process of scientific research.

Wang Lei studied as a postdoctoral fellow at the National Information Center and later worked on a project at the Institute of Automation, Chinese Academy of Sciences. He said, "This experience has deepened my understanding of the industry. Only by following this path can I move on to the future. Now, in order to start a business with Zhongke Wenge, the first step is to address the strategic needs of national media integration."

Meanwhile, Bi Yong, the founder of Zhongke Aurora, has chosen to recruit outstanding individuals to fulfill his duties. He still leads students and is responsible for the technology field in the company. His allocation ratio for entrepreneurship and research is 6:4.

As a researcher at the Institute of Physics and Chemistry, Chinese Academy of Sciences, in Bi Yong's eyes, the deep understanding of a certain industry or discipline accumulated by scientists over decades is difficult to replace. So scientists starting businesses cannot be beaten to death with a single blow. "They have a great characteristic of being good at learning and having strong learning abilities. If entrepreneurial scientists realize the importance of the market for the transformation of scientific research results, once they take the initiative to learn, they can quickly transform."

Mi Lei, founding partner of Zhongke Chuangxing, said, "The famous Three Immortals of Virtue, Speech, and Merit have always been a high pursuit of ancient Chinese intellectuals. Today, scientists and entrepreneurs are able to simultaneously achieve the three immortal pursuits of knowledge, society, and economic value. During the critical period of innovation driven development and transformation in China's economy, the Chinese Academy of Sciences, as a national strategic scientific and technological force, should explore a way out for the industrialization of scientific and technological achievements.".

Of course, it is worth pointing out that scientists have a high bottom line for entrepreneurship in the future, with their technology undergoing rigorous testing and high barriers. In addition, previous scientific research achievements and reputation have been widely spread, and there is a certain celebrity burden. Therefore, once choosing to start a business, one will invest very seriously, iterate, and solve problems, and the probability of success is not small.

Institute of Computer Technology, Chinese Academy of Sciences

Institute of Electronics, Chinese Academy of Sciences

In addition, technology is naturally relatively stable, and in the era of technological explosion, rich application scenarios are the holy land of technological innovation. In recent years, with the continuous breakthroughs in fields such as data algorithms, virtual reality, artificial intelligence, brain computer interfaces, gene editing, mechanical bionics, aerospace technology, etc., China has entered an era of actively seizing and mastering the initiative of original technology.

As a result, news of scientific researchers starting their own businesses continues to emerge from the Chinese Academy of Sciences. For example, Chen Tianshi, a researcher at the Institute of Computing and doctoral supervisor of the Chinese Academy of Sciences, has successfully founded the Cambrian and listed it on the stock market. For example, easily searchable sources such as Zhongke Huiyuan, Zhongke Yushu, Zhongke Weilan, Zhongke Microelectronics, Zhongke Xinjin, Zhongke Benyuan, Zhongke Haoxin, Zhongke Yuanli, and Zhongke Jiuyuan have all received a lot of financing.

The spring of scientist entrepreneurship has arrived.

Of course, in addition to the internal factors of self breakthrough entrepreneurship among researchers at the Chinese Academy of Sciences, the external environment is also increasingly favorable for technology entrepreneurship.

Firstly, technology has effectively brought about improvements in the industry.

To achieve economic takeoff in China, it is necessary to constantly innovate in technology entrepreneurship and seize the commanding heights. Where are there abundant technological resources? It is obvious that China's scientific and technological resources are located in universities and research institutes. Only by excavating and utilizing these resources reasonably can we seize the technological high ground in international competition.

Zhang Ting believes that regarding the bottleneck of chip technology, China used to mostly adopt import methods, which were not expensive and provided a good product experience. But under the competition between China and the United States, the United States prohibits exporting some chips to specific Chinese companies, which forces China to control its core technology.

Bi Yong talked about the crucial role of scientific research and technological innovation in the transition from "Made in China" to "Created in China". Taking the economically active Jiangsu and Zhejiang regions as an example, although traditional manufacturing industries have good economies and large output values, they are relatively weak in terms of technological content. Developing technology enterprises is the only way for China to move from an economic powerhouse to an economic powerhouse.

Nowadays, China has entered the level of a moderately developed country, and its economic growth structure needs to be upgraded. "Future development will definitely rely on technology, and this main line will not change in the next 20-30, 30-40 years."

In this context, money will naturally flood in first, and as a leading investment institution, it will also naturally go hunting for projects of the Chinese Academy of Sciences and high-quality university projects.

Secondly, after the birth of the Science and Technology Innovation Board, not only did Chinese science and technology enterprises log in to the board, which is also a favorable policy for the transformation of scientific research achievements by the country. In fact, it also points out the development direction for enterprises.

Within four years of its establishment, Zhongke Wenge has completed five rounds of financing and has been rated as a national specialized, refined, and innovative "little giant" enterprise. It is now preparing to go public.

Zhongke Aurora has developed a new generation of laser display products, including ultra-high definition laser home theaters, high-performance laser digital theaters, and special displays. In 2020, it won the "Golden Bridge Award" in the technology market and was selected as a quasi unicorn enterprise in Hangzhou's advanced manufacturing industry.

The flexible circuits manufactured by Dream Ink can be completely folded hundreds of thousands of times, and even stretch elastically, expanding the application scenarios of flexible electronics. Through the efficient, low-carbon, and environmentally friendly process of additive manufacturing, the threshold for electronic manufacturing is lowered, thereby liberating the productivity of flexible electronic manufacturing.

The large capacity energy storage of China National Energy Corporation is a key supporting technology, and the Institute of Engineering Thermophysics of the Chinese Academy of Sciences is the only research institution in China with research and experimental capabilities for 1MW-10MW-100MW level compressed air energy storage.

There is also Xinchangzheng, a company specializing in the design and development of new power semiconductor devices and module manufacturing. In the next 3-5 years, it will mainly focus on new energy (automotive, power generation, energy storage), industrial control, consumption, and other fields. It has entered key scenarios such as new energy vehicles, distributed optoelectronics, and energy storage, achieving mass shipments.

Zhongke Chuangxing talked about it.

In fact, from the perspective of scientific research achievements themselves, the conversion rate of scientific research achievements in China is less than 5%, and the remaining 95% may be locked in drawers. In Zhang Ting's eyes, capital is indeed helping to successfully transform scientific research achievements.

From a market perspective, China's demographic dividend is nearing its end, and it is difficult for mobile internet to find new growth. Just looking at the stock prices of internet companies shows some signs, but this does not mean stepping back, it is just entering a new stage of maturity. There is also consumption and education. Consumption has been booming for a while, and the education track has been forced to cut back. The focus of development has shifted to technology.

Recently, Shen Nanpeng, founder and executive partner of Sequoia China, delivered a keynote speech. He believes that the theme of entrepreneurship in China is undergoing profound changes, and an era dominated by technology has arrived. Innovation and entrepreneurship are increasingly returning to original and hardcore technological innovation.

At the beginning of 2021, Hillhouse Venture Capital announced a surprising number: it invested in over 200 projects in a year, with technology driven companies accounting for 78%, including over 80 hard technology investments. But the number "80" was broken by Hillhouse in half of 2021.

However, not everyone can catch the train.

Not long ago, a Chinese Academy of Sciences enterprise organized an investor meeting to select investment institutions through bidding. At the end of the meeting, I saw a scene where multiple investors rushed forward, squeezed into the crowd, scanned the code and added the founder's WeChat. Those who arrived later could only watch the founder wave away, leaving only the spot of the spotlight shining on them. They stood in place, seemingly losing their admission tickets.

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